In 2019, coastal shipping and transport via inland waterways made quite a ripple
The day is not too far off when cargo from Assam travels all the way down south and vice-versa via Inland Waterways Transport (ITW) and coastal shipping. In the last couple of years, the Centre has given tremendous impetus to both coastal shipping and IWT in an attempt to reduce logistics cost to less than 10 per cent of GDP — on par with developed countries such as Germany — from the present 13 per cent.
Rail and road combined carry nearly 90 per cent of India’s cargo, but are choking due to congestion despite well-established networks. Both major and non-major ports have attracted huge investment and enough capacity has been created. Thus, the next phase is to boost coastal shipping and IWT, and that’s what the Centre has doing.
Currently, coastal shipping contributes 6 per cent of cargo traffic at ports. The Sagarmala programme plans to double this by 2025 aided by initiatives such as Coastal Berth Scheme; relaxation of Cabotage; abatement of service tax on coastal shipping; green channel clearance for coastal cargo; exemption on lighthouse dues for coastal ships and reduction in GST on bunker fuel to 5 per cent from 18 per cent.
K Ravichandran, Senior Vice President, ICRA Ltd, who tracks the ports and shipping sector, said that coastal shipping has grown to nearly 120 million tonnes (mt) in fiscal 2019 as against 83 mt in fiscal 2015, and is set to increase to 220 mt in the next few years. Considering the potential of coastal shipping, in 2019 Container Corporation of India entered coastal shipping with initial focus on the West Coast. It will later be extended to the East Coast, he said.
ADB action plan
The Asian Development Bank has also come out with an action plan for coastal shipping in September 2019, which provides recommendations on infrastructure development needed to boost coastal shipping. There is also traction in coastal coal movement of domestic coal for power companies, he said.
From an economic perspective, it is important that coastal shipping is developed. A report by Morgan Stanley in 2016 said that the shift to coastal shipping will result in lower transportation costs. Growth in coastal shipping, at the expense of sending cargo by road, could reduce costs by $2.5 billion by 2025.
The lower cost of transporting bulk commodities, from coal to metal ores, will also distribute savings across the value chain of end-user industries. India’s manufacturing sector, long hindered by high logistics costs, can redeploy those savings elsewhere, for example, toward hiring more workers and expanding operations, which could help fuel economic growth, the report said. A similar boost is also being given by the government to IWT, which is now one of the most promising modes of transport. Over 100 inland waterways (IW) have been identified to be National Waterways (NWs). Out of total 111 NWs, work at 13 NWs have been taken up and studies at others are under way.
Despite having an extensive network of inland waterways in the form of rivers, canals, backwaters and creeks, freight transportation by waterways is under-utilised. Waterways currently contribute around 6 per cent to India’s transportation modal mix, which is significantly less than that in developed economies and some of the developing economies. In some countries, the share is over 50 per cent.
However, Pravir Pandey, Vice-Chairman of Inland Waterways Authority of India and Project Director of Jal Marg Vikas Project (JMVP), is quite buoyant. In a recent Sagarmala publication, he said India’s logistics industry is witnessing a major shift as multimodal terminals are being planned on the country’s national waterways and freight villages set up for smooth transportation of cargo.
According to World Bank economic analysis, about 1.5 lakh direct and indirect employment opportunities will be created by interventions under the JMVP in Uttar Pradesh, Bihar, Jharkhand and West Bengal.
Incidentally, the Ministries of Shipping, and Chemicals and Fertiliser are jointly promoting the movement of fertilizers through coastal shipping and inland waterways.
Huge investment is being planned to develop National Waterways with nearly ?2,000 crore invested in National Waterway-1. Of the three multimodal terminals to be built on the Ganga river under JMVP, the one at Varanasi in UP and Sahibganj in Jharkhand are already operational. Work on the third at Haldia and a new Navigation Lock at Farakka (both in West Bengal) is on in full swing.
The NW-1 along with the proposed Eastern Dedicated Freight Corridor and NH-2 constitute the Eastern Transport Corridor of India, connecting the National Capital Region (NCR) with the eastern and North-East States. Additionally, they will function as a link to Bangladesh, Myanmar, Thailand, Nepal and other East and Southeast Asian countries.
Growth in cargo
Government data shows that cargo movement by IWT has increased to 72.31 mt in fiscal 2019 from 55.03 mt in fiscal 2018 with plans to push it up to 150 mt by 2025.
There was good traction on NW1 in the last two years. The projects on other NWs are also under implementation. However, the progress has been slow due to low draught in several locations and there is high requirement of dredging to make the waterways navigable for cargo vessels. To make inland waterways viable on all planned locations, the government needs to ensure that minimum required draught is maintained on these routes, Pravir Pandey said.
With 2019 ending on a high note for both coastal shipping and IWT, 2020 could be more promising.
Source: The Hindu Business Line